Business Buzz is a monthly column presented by the Bermuda Small Business Development Corporation. Every month, read about entrepreneurship, obtain business management tips, and find out what's going on in the small business sector.A Blueprint for Managing Your Business in A Slow Economy Part 2This is part two of the three-part article that discusses tips for managing your business in a slow economy. Last month we identified that utilising a strategic plan to help guide you through tough times is the best way to weather an economic storm. For the purpose of this three-part article, we will refer to this strategic plan as the Blueprint.There are three major components to your Blueprint:1. Cash Management Plan2. Costs Reduction Plan3. Future PlanWe discussed the Cash Management Plan last month. You may recall that this plan allows you to look at cash flow projections, accounts receivables, inventory, accounts payable and bank financing. This month we will focus on the second plan the Cost Reduction Plan.2. Cost Reduction Plan: This part of your Blueprint involves your staff, discretionary and non-discretionary costs, and capital expenditures. You can utilise the intellectual capital of your organisation your employees/staff.Ask your employees for ideas about how to reduce costs. Often they are the closest to the customers and can provide you with invaluable insight and information on what is working and what may be a waste of time and money. For some companies, salaries represent the biggest expense. As is the case for most organisations, there is often overlap in employee responsibilities. During an economic downturn, controlling overlapping responsibilities, cutting back on hours or making the decision to lay off employees who are not integral to the success of the business can result in cost savings for the entire organisation. If you do have to lay off employees, then it may be necessary to retrain the remaining staff or reallocate job duties. Although severe, a savings on wages and benefits may give your business the needed breathing room to withstand the downturn.Another way to reduce costs is to identify your discretionary and non-discretionary expenses. Your discretionary expenses are those that are changed easily by management decision such as advertising, repairs and maintenance, and research and development. It may have been important for you to have Sumatra coffee at $6 a bag for your employees prior to the downturn, but you may decide that during this downturn Maxwell House at $3 a jar gets the job done just the same. This decision cuts your discretionary cost for this product in half and saves your company money.You should also reconsider any capital expenditures that you may have planned for. Capital expenditures are funds used by a company to acquire or upgrade physical assets such as property, industrial buildings or equipment. This type of outlay is made by companies to maintain or increase the scope of their operation. These expenditures can include everything from repairing a roof to building a brand new factory.It is unwise to take on any capital expenditures during an economic down time and if you had any in the pipeline, you may want to consider putting them on hold. By deferring the purchase of capital expenditures, you can put aside necessary funds to help your business sustain itself during a slow period. This is especially the case for seasonal businesses that experience slow periods during winter months.Check out next month's column for the last instalment of this three-part article. We will discuss the final component of your Blueprint, the Future Plan. This Plan helps you to answer the question: What next?Jamillah Lodge is a Business Development Officer for Bermuda Small Business Development Corporation. She specialises in providing aspiring and existing entrepreneurs with business development advice and loan guarantee assistance. In addition, she manages the marketing and communications plan for the Corporation and oversees the development of a mentorship and youth entrepreneurship programme. She has a degree in Business Administration with a concentration in Marketing. The opinions expressed in this article are those of the writer and should serve a general guide and should not be considered as replacement advice from a lawyer, accountant or other professional service provider. Readers should consult with the appropriate professionals as necessary.If you have questions about starting a business in Bermuda or suggestions for articles, contact BSBDC: E-mail us at info[AT]bsbdc.bm or call 292-5570.